Untangle your investing hodgepodge in 2018

Situation:

My View:

Untangling the unwanted situation is intimidating to investors.

Solution:

Recognize implications of the hodgepodge then untangle the mess.

“Well done is better than well said.” — Benjamin Franklin

2018 bells will soon be ringing. Many investors take the opportunity to make New Year resolutions. Accordingly, I’m about to ask you to take a long, hard look at your present composition of portfolio investments. Especially those earmarked for the family retirement.

It’s critical for you to be truthful about your findings. Don’t sweep anything under the rug. A specific plan of action may be required at least in the short term, maybe longer.

Your better bet is to adopt and implement fresh ideas.”

You likely purchased the investments over time, perhaps for reasons that no longer apply. They may now resemble a hodgepodge of stuff. The more convoluted compositions were likely purchased from several firms without a single unified blueprint.

Chances are that your portfolio composition derives benefits from a total revamp or reconstruction. The aim is for your nest egg to get back in sync with your goals. Hence, you require a thorough and honest assessment of whether your nest egg is a tangled patchwork or worth keeping in its present form.

Several revamps may be undertaken during a lifetime. For instance, the family residence hovers near the top of that project list. I submit that investment portfolios should also be included as top remodelling candidates. I can’t think of a logical reason to exclude them.

My findingsOver the years, I’ve kept tabs on portfolios that I reviewed seeking second opinions. The owners ranged from do-it-yourself investors, to those dependent on advisers. Various age groups were well represented.

The portfolio with the least number of investments had 3 names, while the highest had near 100 selections. It’s not unusual for such portfolios to hold a hodgepodge of 15 to 35 mutual funds purchased from a handful of providers. A recurring reason for the purchases is that that they were on someone’s list of “must have” winners. Let’s be frank: few investors are comfortable buying laggards. It takes a contrarian mind to buy and hold laggards when nobody wants them.

It’s also a daunting task for anyone with a full time job to analyze and keep track of a dozen or more investments. Several curves and potholes can get in the way of your investing roadway. Particularly, when the portfolio fit and purpose has dwindled or vanished.

There are three questions that every investor ought to ask:

Do I own an investing patchwork of stuff?

How did I get there?

Which corrective actions are in my best interests?

Don’t repeat the same mistaken approach that no longer works. The outcome will remain much the same. Your better bet is to adopt and implement fresh ideas.

Signs of hodgepodgeFirst, here is my summary of vital signs you’re a strong candidate for a portfolio retrofit:

You don’t receive unbiased and objective advice.

Retirement projections are out of date or non-existent.

You are fuzzy on what “asset mix” is or does.

The personal investment plan is missing in action.

You have accumulated plenty “flavour of the day” selections.

Rebalancing is not a familiar strategy in your toolbox.

You own too many investments.

Broad portfolio diversification is lacking.

You do not recognize all the portfolio risks incurred.

Levels of stocks and mutual funds are too high for comfort.

Your resolveOwning a patchwork of investments is a sure way to derail your well-crafted portfolio. Even having just one or two such signs can be problematic. The arrival of 2018 is your cue to first assess the hodgepodge on hand. Then begin the process of straightening out the unwanted mess.

Stumble no more and proceed with confidence. It’s quite easy to renew your investing patchwork of stuff. Savvy investors have learned to spot the signs and methodically deal with each one. Just keep the total portfolio composition at your finger tips.

If you clearly have a hodgepodge, take the appropriate medicine and right your ship soon. Your mission is to minimize the bumps of investing for 2018 and beyond. Tread carefully and methodically. Not all investment selections may need attention.

A revamp or de-clutter may be the sound and straightforward approach to untangle your mishmash. If the task is too unwieldy, design a fresh blueprint. Perhaps, getting help from a new set of eyes will start your 2018 on better investing footing for the long run.

President Franklin got it right. Stop talking about it and get your mission under way. You will become a much happier investor.

I welcome your questions, feedback and comments.

About Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA My expertise in the investment and financial advisory profession began in 1972. I graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971. I then attended the University of British Columbia, graduating with the MBA in 1972.
I have attained the “Discretionary Portfolio Manager” professional designation. I am committed to offering clients the highest standard of personal service by providing prompt, courteous and professional attention. My advice is objective, unbiased and without conflicts of interest. I’m part of a team that delivers comprehensive services and best value in managing client wealth.

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I am a strategy manager, not a stock picker. My speciality is designing and managing retirement portfolios for the long run. My investment management services are discretionary, the highest designation attainable. I am independent, fee-only, not affiliated with products or institutions. My advice is objective, unbiased and without conflicts of interest.Read more >>